Global bond markets face renewed pressure as US and European government borrowing costs surge to multi-decade highs, raising concerns about inflation, growth, and market valuations amid geopolitical tensions.
Global bond markets are under renewed pressure, with long-dated government debt in the US and other major economies selling off as investors reassess inflation, growth and policy risks. Business Today reported that US 30-year Treasury yields have climbed to their highest level since 2007, while government borrowing costs in France, Germany, the UK and Japan have also stayed elevated. Higher yields can lift financing costs for governments, companies and households while weighing on both bond prices and equities.
Abhishek Basumallick, co-founder and fund manager at Shree Rama Managers, told Business Today that the jump in US bond yields has been a major factor behind recent weakness in share markets. He warned that if inflation remains stubborn and geopolitical tensions stay high, American yields could move still higher, deepening concerns about global markets and the valuations of technology stocks.
The latest move fits a broader pattern seen earlier this year. In May, S&P Global Market Intelligence said a global bond sell-off was driven by rising inflation expectations, which pushed government yields to multidecade highs. The report linked the move to surging energy costs and said central banks were being forced to reconsider rate-cut plans, potentially slowing growth and creating headwinds for equities.
That same dynamic was visible in March, when Euronews reported that bond yields rose across Europe and the US as the Iran war intensified worries about oil and gas prices. Investors demanded higher returns to compensate for inflation risk, and shorter-dated debt rose faster than longer-dated bonds, signalling concern that central banks could keep policy tighter for longer.
The strain on Treasuries has also revived an old debate about their role in portfolios. Investing.com reported in May that the 30-year US Treasury yield rose above 5%, while another report from the same month said the 10-year yield climbed sharply as investors priced in stronger inflation, heavier government borrowing and more expensive loans for consumers and firms. In July, Morgan Stanley Research said moderating inflation could eventually help Treasury values recover, but it also noted that higher market rates have already done much of the work of additional Fed tightening, reducing the case for more policy action this year.
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